Comparing Peabody Energy (BTU) and Arch Coal (ARCH)

Arch Coal (NYSE: ARCH) and Peabody Energy (NYSE:BTU) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, profitability, dividends and institutional ownership.

Dividends

Arch Coal pays an annual dividend of $1.40 per share and has a dividend yield of 1.7%. Peabody Energy does not pay a dividend.

Analyst Recommendations

This is a breakdown of recent recommendations for Arch Coal and Peabody Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arch Coal 0 1 8 0 2.89
Peabody Energy 0 2 7 0 2.78

Arch Coal currently has a consensus price target of $93.00, suggesting a potential upside of 11.78%. Peabody Energy has a consensus price target of $36.25, suggesting a potential upside of 8.08%. Given Arch Coal’s stronger consensus rating and higher possible upside, equities analysts clearly believe Arch Coal is more favorable than Peabody Energy.

Valuation & Earnings

This table compares Arch Coal and Peabody Energy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arch Coal $1.97 billion 0.92 $1.28 billion N/A N/A
Peabody Energy $4.72 billion 0.74 -$729.30 million N/A N/A

Arch Coal has higher earnings, but lower revenue than Peabody Energy.

Profitability

This table compares Arch Coal and Peabody Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arch Coal N/A N/A N/A
Peabody Energy 4.60% 19.92% 2.74%

Institutional and Insider Ownership

37.0% of Arch Coal shares are held by institutional investors. Comparatively, 95.2% of Peabody Energy shares are held by institutional investors. 1.3% of Arch Coal shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Arch Coal beats Peabody Energy on 7 of the 12 factors compared between the two stocks.

Arch Coal Company Profile

Arch Coal, Inc. is a coal producer. The Company is engaged in the production of thermal and metallurgical coal from surface and underground mines located throughout the United States, for sale to utility, industrial and steel producers both in the United States and around the world. The Company operates mining complexes in West Virginia, Kentucky, Maryland, Virginia, Illinois, Wyoming and Colorado. The Company’s segments include the Powder River Basin and Appalachia. The Powder River Basin segment includes operations in Wyoming. The Appalachia segment includes operations in West Virginia, Kentucky, Maryland and Virginia. The Company also sells coal from operations in Colorado and Illinois. Powder River Basin consists of Black Thunder and Coal Creek mines. The Company’s mines in Appalachia include Coal-Mac, Lone Mountain, Mountain Laurel, Beckley, Vindex, Sentinel and Leer. The Company operates, or contracts out the operation of approximately 10 active mines in the United States.

Peabody Energy Company Profile

Peabody Energy Corporation is a coal company. The Company’s segments include Powder River Basin Mining, Midwestern U.S. Mining, Western U.S. Mining, Australian Metallurgical Mining, Australian Thermal Mining, Trading and Brokerage, and Corporate and Other. Its Powder River Basin Mining operations consist of its mines in Wyoming. Midwestern U.S. Mining operations reflect the Company’s Illinois and Indiana mining operations. Western U.S. Mining operations reflect the aggregation of the New Mexico, Arizona and Colorado mining operations. Australian Metallurgical Mining operations consist of mines in Queensland and New South Wales, Australia. Australian Thermal Mining operations consist of mines in New South Wales, Australia. Its Trading and Brokerage segment engages in the direct and brokered trading of coal and freight-related contracts through the trading and business offices. Its Corporate and Other includes selling and administrative expenses, and corporate hedging activities.

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